Core Scientific, the Bitcoin mining firm, has landed on the edge of being bankrupt. The company is now short of cash to pay out to its clients. In fact, it is completely out of cash.
The Mighty are Falling
Core Scientific is one of the biggest Bitcoin miners in the world. And it recently raised the alarm that it might be going out of business by the year’s end. It would subsequently declare bankruptcy.
Bitcoin miners have struggled to stay in business this year because of the asset’s sharp fall. Their operations ran barely profitably as a result. As a matter of fact, some mining operators packed up their businesses completely.
Further to the fall of Bitcoin prices, the increased energy cost has been major and it affected Core Scientific. The company stated this in its filing at the United States Security and Exchange Commission. The filing was submitted on Thursday the 27th of October.
As earlier stated, the increased Bitcoin hash rate caused miners a lot of setbacks. This might have triggered the observed selling pressure. And it might cause more in the future if the situation does not improve.
Core Scientific declared that it will not be able to pay up its equipment providers for October and November. The company is equally seeking other financial alternatives. These include trying to raise more capital, restructuring its current financial template, and employing financial advisors.
As of the time of this report, Core Scientific holds just 24 Bitcoin tokens worth approximately $26.6 million. The current holding is a far cry from the 1,501 it possessed when it filed before the SEC in September.
Core Scientific is a publicly traded Bitcoin mining company with the ticker CORZ under Nasdaq. Its stock value crashed heavily during the pre-market hours on Thursday. CORZ stocks crashed by 71% within the past 24 hours and dropped down to as low as $0.29.
Core Scientific decided to be listed on Nasdaq just in January this year. But it has been a poor outing of a year for the mining company in the middle of the crypto winter. The selling pressure on Wall Street made it worse altogether.
Blomberg recently reported that mining firms like Core Scientific have opted to sell stocks recently. They had to resort to one of their least favorite means of raising money in the face of failed profits. And they cannot borrow because of the increasing interest rates.
The company entered a common stock-buying agreement worth $100 million in September. Its partner in the deal is B. Riley Principal Capital II.